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Which approach should take if the currency spot rate

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Problem 1: Sam has put aside C$5,000 for his travel to Japan in a year from now. He could invest the money in Canada and earn 4.5%, and then convert it to Japanese yen (JY) when he leaves. Alternatively, Sam could convert the funds to JY and earn a 4.85% on a Japanese investment today. Which approach should he take if the currency spot rate is CSIJY=0.008872 and the 1-year forward rate is 0.008738?

Reference no: EM132941653

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